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Pilgrim's Pride (PPC) Up on Q3 Earnings Beat, Solid Sales

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Zacks Equity Research
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Pilgrim's Pride Corporation PPC reported robust third-quarter 2020 results, with the top and the bottom line increasing year over year. Also, earnings surpassed the Zacks Consensus Estimate. The upside can be attributed to robust performance in European and Mexican operations. Shares of Pilgrim's Pride were up almost 7% in the after-market trading session on Oct 28. Further, shares of this Zacks Rank #2 (Buy) company have increased 3.1% in the past three months compared with the industry’s growth of 2.1%.

Let’s take a closer look.

Q3 in Detail

Adjusted earnings per share of 66 cents increased 46.7% from 45 cents reported in the year-ago quarter. The Zacks Consensus Estimate for earnings was pegged at 33 cents.

In the reported quarter, Pilgrim's Pride generated net sales of $3,075.1 million, up 10.7% year over year. The upside was owing to robust performance in Europe and Mexico operations.

Revenues in the U.S. operations amounted to $1894.2 million, down 1.9% year over year. The downside was due to the challenging environment in commodity segments. Notably, large bird deboning category was especially challenged during the quarter. Nevertheless, the company is seeing rebound in demand with impressive growth in Retail and QSR business.

Mexican operations generated revenues of $335.2 million in the reported quarter, up 2% year over year. The uptick was caused by normalization in economic activities, balanced supply/demand scenario, favorable peso as well as efficient operations. However, unfavorable mix and escalated operating expenses were headwinds.

Revenues from European operations surged 63.4% year over year to $845.7 million. The uptick was driven by better operational efficiencies, robust retail demand as well as solid pork exports to china. Also, synergies contributed to the upside. However, lower demand in foodservice acted as a deterrent.

Pilgrims Pride Corporation Price, Consensus and EPS Surprise

Pilgrims Pride Corporation Price, Consensus and EPS Surprise
Pilgrims Pride Corporation Price, Consensus and EPS Surprise

Pilgrims Pride Corporation price-consensus-eps-surprise-chart | Pilgrims Pride Corporation Quote


Pilgrim's Pride’s overall cost of sales in the reported quarter increased 10.6% year over year to $2,761.3 million. Nevertheless, gross profit increased 11.2% year over year to $313.8 million.

Further, adjusted EBITDA was $305 million, up 18.1% year over year. Adjusted EBITDA margin of 9.9% expanded 0.6 percentage points on a year-over-year basis.

Other Financial Details

Pilgrim's Pride exited the quarter with cash and cash equivalents of $768 million, long-term debt (less current maturities) of $2,610.7 million and total shareholders’ equity of $2,431.3 million. Further, the company generated $508.3 million as cash from operating activities for nine months ended Sep 27, 2020.

More Solid Food Stocks

United Natural Foods UNFI, with a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 4.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowers Foods FLO with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 8.2%, on average.

Lamb Weston LW, with a Zacks Rank #2, has a long-term earnings growth rate of 7%.

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